CR 97-186 Housing Improvement Area PolicyOctober 15, 1997
Proposed Action
Overview
Primary Issues to Consider
Supporting Documents
erste ► lverum
Hou ' g Coordinator
1 Y
0
HOUSING IMPROVEMENT AREA POLICY
Council Rpt #97 -186
Staff recommends approval of the following motion Approve the City of Hopkins Housing
Improvement Area Policy as proposed including supporting application documents.
With this motion, the policy and application process will begin to be utilized when considering
requests for Housing Improvement Area financing.
In 1994 the City of Hopkins was granted the authority by the State of Minnesota to create
Housing Improvement Areas in order to finance private housing improvements. To date, the City
of Hopkins has established two Housing Improvement Areas; one encompassing the Meadow
Creek Condominiums and one for the Westbrooke Patio Homes.
The City may, in the future, be petitioned to establish additional Housing Improvement Areas. In
order to assure the best possible use of this financing tool the City Council has directed staff to
develop a draft Housing Improvement Area Policy. The Policy attempts to guide the use of this
tool and also establishes an application process to be followed.
o What is the purpose of the document?
o What are the major points of the proposed policy?
o Proposed Housing Improvement Area Financing Policy
HIA Policy
Council Rpt. 97 -186
Page 2
Analysis of the Issues
What is the purpose of the document?
The proposed Housing Improvement Area policy would clearly state the goals of the City in using
this financing tool. The policy would provide approval criteria that could be used as the basis for
approval or denial of an application. The approval criteria attempts to weigh the neighborhood
benefit against the risk to the City.
The policy clearly outlines the requirements for HIA financing allowing association members to
evaluate its use in their particular situation. The proposed application forms define and
standardize the application process.
o What are the major points of the proposed policy?
The proposed policy establishes the goals for the use of HIA financing including:
o neighborhood revitalization
o correction of code violations
o to maintain or obtain FHA eligibility
o to increase the tax base
o to increase owner- occupancy levels
In addition, the policy identifies the minimum criteria that a proposed project must meet including:
o must provide adequate financial guarantees to ensure repayment of the bonds
o Association must provide an operating budget and long -term financial plan
o improvements should be exterior, common area improvements which are permanent
o a favorable review of proposed project and outstanding HIA debt by Financial Advisor
and /or Bond Counsel.
o must meet one or more established goals of HIA financing
Included with the proposed policy is a proposed application process. The application information
further defines the requirements for HIA financing including administrative requirements such as
the requirement of the Association to enter into a development agreement, the payment of a City
administrative fee of one half percent of the bond issue or $10,000, which ever is greater and the
use of the City's choice of Bond Counsel, Financial Advisor and Escrow Agent.
Alternatives
The City Council has the following alternatives regarding this issue:
o Adopt the Housing Improvement Area policy as proposed.
o Modify policy prior to adoption.
o Elect not to adopt a policy regarding Housing Improvement Area financing.
o Continue this item for more information.
•
1. PURPOSE
CITY OF HOPKINS
HOUSING IMPROVEMENT AREA POLICY
1.01 The purpose of this policy is to establish the City's position as relates to the use of
Housing Improvement Area financing for private housing improvements. This policy shall
be used as a guide in processing and reviewing applications requesting Housing
Improvement Area financing.
1.02 The City shall have the option of amending or waiving sections of this policy when
determined necessary or appropriate.
2. AUTHORITY
2.01 The City of Hopkins has the authority to establish housing improvement areas under 1994
Minnesota Laws, Chapter 587, Article 9, Section 22 through 31.
2.02 Within a housing improvement area, the City has the authority to:
A. Make housing improvements
B. Levy fees and assessments
C. Issue bonds to pay for improvements
3. ELIGIBLE USES OF HOUSING IMPROVEMENT AREA FINANCING
3.01 As a matter of adopted policy, the City of Hopkins will consider using Housing
Improvement Area financing to assist private property owners only in those circumstances
in which the proposed private projects address one or more of the following goals:
A. To promote neighborhood stabilization and revitalization by the removal of blight and/
the upgrading of the existing housing stock in a neighborhood.
B. To correct housing or building code violations as identified by the City Building
Official.
C. To maintain or obtain FHA mortgage eligibility for a particular condominium or
townhome association or single family home within the designated Housing Improvement
Area.
D. To increase or prevent the loss of the tax base of the City in order to ensure the
long -term ability of the City to provide adequate services for its residents.
E. To increase the owner - occupancy level within a neighborhood or association.
F. To meet other uses of public policy, as adopted by the City of Hopkins from time to
time, including promotion of quality urban design, quality architectural design, energy
conservation, decreasing the capital and operating costs of local government, etc.
4. HOUSING IMPROVEMENT AREA APPROVAL CRITERIA
4.01 All HIA financed through the City of Hopkins should meet the following minimum
approval criteria. However, it should not be presumed that a project meeting these criteria
will automatically be approved. Meeting these criteria creates no contractual rights on the
part of any association.
A. The project must be in accord with the Comprehensive Plan and Zoning Ordinances, or
required changes to the Plan and Ordinances must be under active consideration by the
City at the time of approval.
B. The HIA financing shall be provided within applicable state legislative restrictions, debt
limit guidelines, and other appropriate financial requirements and policies.
C. The project should meet one or more of the above adopted Housing Improvement Area
Goals of the City of Hopkins.
D. The term of the Housing Improvement Area should be the shortest term possible while
still making the annual fee affordable to the association members. The term of the bonds
for the area should mature in 20 years or less.
E. The membership should provide adequate financial guarantees to ensure the repayment
of the Housing Improvement Area financing and the performance of the administrative
requirements of the development agreement. Financial guarantees may include, but are
not limited to the pledge of the association's assets including reserves, operating funds
and /or property.
F. The proposed project, including the use of Housing Improvement Area financing,
should be supported by a majority of the owners within the association. The
association should include the results of a membership vote along with the petitions to
create the area.
G. The Association must have adopted a financial plan that provides for the Association to
finance maintenance and operation of the common elements within the Association and a
long -range plan to conduct and finance capital improvements therein.
H. Housing Improvement Area financial assistance should not be provided to projects that
have the financial feasibility to proceed without the benefit of Housing Improvement Area
financing. Evidence that the association has sought other financing for the project should
be provided. Evidence could include letters from private lenders, the results of an
association vote on an assessment or other evidence indicating a lack of other financing
options.
I. The homeowner's association must be willing to enter into a development agreement
which may include, but is not limited to, the following terms:
o establishment of a reserve fund
o staffing requirements
o annual reporting requirements
o conditions of disbursement
o required dues increases
J. The improvements financed through the HIA should be exterior improvements and in
the case of a homeowner's association, the improvements should be restricted to common
areas. The improvements must be of a permanent nature.
K HIA financing should not be provided to those projects that fail to meet good public
policy criteria as determined by the Council, including: poor project quality; projects that
are not in accord with the Comprehensive Plan, zoning, redevelopment plans, and City
policies; projects that provide no significant improvement to the neighborhood and /or the
City; and projects that do not provide a significant increase in the tax base and/or
prevent the loss of tax base.
L. The financial structure of the project should receive a favorable review by the City's
Financial Advisor and Bond Counsel. The review will include a review of performance
and level of outstanding debt of previous Housing Improvement Areas.
Adopted by the City of Hopkins on the day of , 1997.
APPLICATION PROCEDURES FOR ESTABLISHING A
HOUSING IMPROVEMENT AREA
1. Meet with appropriate City staff to discuss the scope of the project, member
participation, time schedule and other information as may be necessary.
2 Complete Preliminary Application for the Establishment of a Housing
Improvement Area. This form should be submitted to the Housing Coordinator
along with the other required documents and a fee payment of $100.
3. The request shall be reviewed by City staff on a preliminary basis as to the
feasibility of the project.
4. Staff will prepare a report for the City Council and the applicant which will include
a financial and legal analysis of the project.
5. The association must then submit the required petitions (minimum of 25% of
owners must sign petition form). At the time the petitions are received, the City
must have the final Association Financial Plan which identifies how both
maintenance and operation of the common elements will be paid for and a
long -range plan to conduct and finance capital improvements.
6. Upon receipt of an adequate number of valid petitions, the City will
have prepared the Plan for the Housing Improvement Area and the proposed
Development Agreement.
7. City will schedule public hearings on the creation of the district and the setting of
the fees (two separate public hearings required).
8. City Council will approve or deny the creation of the Housing Improvement Area
and the associated fees. If approved, the Development Agreement will be
executed, subject to the successful passage of the veto period. (If
35% or more of the owners file a written objection within the veto period, the City
cannot provide financing through a Housing Improvement Area).
9. It is understood that City Staff or City Council may from time to time determine
that a different process than that which is outlined is more appropriate, given the
circumstances of each individual request.
CITY OF HOPKINS
PRELIMINARY APPLICATION
HOUSING IMPROVEMENT AREA FINANCING
Legal Name of Association:
Mailing Address:
Name of Contact Person: Phone:
Name of Management Firm/Agent (if different than contact person)
Phone:
Legal Description of the Project Site:
REQUESTED INFORMATION
Addendum shall be attached hereto addressing in detail the following:
1. Give a general description of the project.
1. Explain how the project will meet the goals of the City Council as identified in Section
3.01 of the City of Hopkins Housing Improvement Area Policy.
2. Provide a proposed timeline for the project including the dates of membership meetings
to discuss project, submittal of required petitions, public hearings, construction start,
submission of first draw request and project completion .
3. List of improvements and estimated project budget.
4. Explain why Housing Improvement Area financing is necessary to undertake the
project. Attach any documentation regarding efforts to secure private financing.
5. Explain the process used to determine the scope of the proposed project and the desire
for HIA financing among the association members. Provide any documentation regarding
owner meetings discussing project.
Attach a copy of the following:
•
•
Association Bylaws
Audited financial statements for last two years
Association Financial Plan which identifies how both maintenance and operation of
the common elements will be paid for and a long -range plan to conduct and finance
capital improvements.
What is the proposed term of the Housing Improvement Area? Years
How do you proposed the fee be charged to the affected property owners?
equally among all properties
Other - for example based on unit size, percent interest in association or value
Please identify:
Amount of bond issue anticipated: $
Are there any properties within the Housing Improvement Area which should be exempt from the
fee? no yes, explain:
REQUIREMENTS FOR HOUSING IMPROVEMENT AREA (HIA) BOND FINANCING
To apply for HIA financing, the owners within the association must agree to the
following:
1. Must use City's choice of Bond Counsel and Financial Advisor(s).
2. Disbursements of bond proceeds must be made through an escrow agent to be selected
by the City of Hopkins.
3. You must pay an administrative fee to the City of one half percent of the bond issue or
flat fee of $10,000 which ever is greater.
4. City staff or it's agents will review the performance and level of outstanding debt of
previous Housing Improvement Areas before recommending the approval of additional
HIA debt.
5. The bond(s) shall be for an issue not less than $250,000.
By signing this application I hereby agree to the following:
1. I have read and will abide by all the requirements of the City for taxable bond financing.
I will also commit all contractors, subcontractors and any other major contributors to the
project to all segments applicable to them.
2. The above information is true and correct.
3. The Association will pay all costs involved in the legal and fiscal review of this project.
These costs include the Bond Counsel and City Attorney, and all costs involved in the
issuance of the bonds to finance the project.
4. I understand that the City reserves the right to deny final approval, regardless of
preliminary approval of the application.
Signature of Representative Date